Your daily commute costs a lot more than what you pay each trip to the gas station. Personal finance blogger Mr. Money Mustache details the true cost of commuting, walking through how to calculate the time and financial burden of a "not too bad" commute, breaking down some of the most common misconceptions about what you sign on for with your daily drive to the office.

It was a beautiful evening in my neighborhood, and I was enjoying one of my giant homebrews on a deck chair I had placed in the middle of the street, as part of a nearby block's Annual Street Party.

I was talking to a couple I had just met, and the topic turned to the beauty of the neighborhood. "Wow, I didn't even realize this area was here", the guy said, "It's beautiful and old and the trees are giant and all the adults and kids hang out together outside as if it were still 1950!". "Yeah", said his wife, "We should really move here!".

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Then the discussion turned to the comparatively affordable housing, and the other benefits of living in my particular town. By the end of it, these people were verbally working out the details of a potential move within just a few months.

Except their plan was absurd.

Because these two full-time professional workers currently happen to live and work in "Broomfield", a city that is about 19 miles and 40 minutes of mixed high-traffic driving away from here. They brushed off the potential commute, saying "Oh, 40 minutes, that's not too bad."

Yes, actually it IS too bad! … But this misconception about what is a reasonable commute is probably the biggest thing that is keeping most people in the US and Canada poor.

Let's take a typical day's drive for this self-destructive couple. Adding 38 miles of round-trip driving at the IRS's estimate of total driving cost of $0.51 per mile, there's $19 per day of direct driving and car ownership costs. It is possible to drive for less, but these people happen to have fairly new cars, bought on credit, so they are wasting the full amount.

Next is the actual human time wasted. At 80 minutes per day, the self-imposed driving would be adding the equivalent of almost an entire work day to each work week – so they would now effectively be working 6 workdays per week.

After 10 years, multiplied across two cars since they have different work schedules, this decision would cost them about $125,000 in wealth (if they had for example chosen to put the $19/day into extra payments on their mortgage), and 1.3 working years worth of time, EACH, spent risking their lives daily behind the wheel*.

That's EVERY ten years. And that's with a commute that most Americans claim is "not too bad".

You'll note that most 30-year-old couples today, about 10 years into adulthood, don't even have $125,000 in net worth. And they probably drive around quite a bit in expensive financed cars, mostly as part of a self-imposed commute. These facts are directly related!

The alternative I would have recommended to this couple, if they had asked my opinion, would be to make sure their house is within biking distance of both jobs, immediately sell both borrowed cars and replace them with a single ten-year-old manual transmission hatchback, and finally, let the good times roll. Setting aside $10k to keep the new car on the road, they will certainly enjoy their $115,000 of extra cash after ten short years, and if they combine this trick with a few of the other MMM classics, they'll be able to move to historic old-town Longmont as EARLY RETIREES within ten years, instead of being broke wage slaves still commuting out of here each morning when the year 2021 rolls around.

Now, I will admit that it is of course possible to bring your cost per mile down somewhat. That's one of my own specialties, which is why I still keep a car of my own around for affordable family roadtrips. If you buy the right car for $5,000, you might be able to squeeze 100,000 miles out of it with no major repairs. In this case the car depreciation is 5 cents per mile.

So the ultimate cheap driving in a paid-off economy car still costs at least 17 cents per mile. I'll assume you will keep the insurance since most people aren't willing to go completely car-free (although if you are – good for you!).

And there are also ways to live in the town of your dreams without signing up for a commute – get a new job! (There are plenty of them here in my own city, many being worked by people who commute from other towns).

But despite the availability of both of these options, the idea of living close to work still seems to be completely alien to most people I've met. While I would personally consider it far more important than even the salary or the work performed, most people put commute distance below house price, perceived school quality, and neighborhood preference.

To put things back on par, let's whip up a couple of quick commuting equations. Let's assume the average person's marginal driving cost is halfway between the Ultra-Mustachian driver figure of 17 cents per mile, and Uncle Sam's generous 51 cent allowance. So, 34 cents. Let's also assume the value of a person's time is $25 per hour, since this is close to a median wage for a suburban commuter. (If you don't think you'd use your newfound leisure time that productively, you need to think more like an Early Retiree. I used mine for plenty of learning and domestic insourcing).

For each mile you drive across two times on your round trip to work daily, it multiplies to 500 miles per year, or a $170 annual fee
For each of these miles, you waste about 6 minutes in the round trip, adding to 25 hours per year ($625 of your time).

So each mile you live from work steals $795 per year from you in commuting costs.

$795 per year will pay the interest on $15,900 of house borrowed at a 5% interest rate.

In other words, a logical person should be willing to pay about $15,900 more for a house that is one mile closer to work, and $477,000 more for a house that is 30 miles closer to work. For a double-commuting couple, these numbers are $31,800 and $954,000.

Adapting the numbers for a $7.50 minimum wage earner, each mile of car commuting cuts $1.43 from your workday. If you drive 10 miles to go work a 5-hour shift at the Outback Steakhouse, your effective hourly wage is more like $5 per hour after subtracting car costs and adding drive time.

And these are all numbers for the United States, where cars and gasoline are much, much cheaper than they are in almost any other country. In Canada, you can add 30% to the gas prices and 50% to the car prices. In the UK, still more.

If these numbers sound ridiculous, it's because they are. It is ridiculous to commute by car to work if you realize how expensive it is to drive, and if you value your time at anything close to what you get paid. I did these calculations long before getting my first job, and because of them I have never been willing to live anywhere that required me to drive myself to work**. It's just too expensive, and there is always another option when choosing a job and a house if you make it a priority.

And making that easy choice is probably the biggest single boost that will get the average person from poverty to financial independence over a reasonable period of time. I would say that biking more and driving less was the trigger in my own life that started a chain reaction of savings and happy lifestyle changes that led my wife and I to retirement in our early 30s.

Now, all this doesn't mean you have to set up a tent on your employer's front lawn to avoid going broke. Public transit, although an afterthought in most of the US, is great if it's available to you, because you get your brain and your hands back for the purpose of getting some of your day's work done while enroute.

But if you can walk or bike to work, it will cost you virtually nothing. And it also doesn't count as using up your personal time because it is adding something that nobody except Olympic athletes is doing enough of anyway – exercise. You can take your time spent riding your bike ride directly out of time you would have otherwise spent in the gym, or waiting in the doctor's office for prescription medication.

So there's my answer for this potential new set of neighbors. I'll see you in ten years!

And now that the truth has at last been revealed about the foolishness of commuting, I'm looking forward to reading about the empty interstates and bicycle-filled streets tomorrow morning.

* Note that I wrote this whole rant without bringing up that whole pesky "destroying the entire Earth" issue, since that part is controversial in the United States, so I figured it's best just to focus on making you rich.

** For the Record, I grew up in the Great Lakes area, on the Canadian side just a 30 minute drive North of Buffalo, NY. Then I spent a few years in an area much colder – Ottawa, Canada, with a climate just a bit worse than Minneapolis. Biking year-round in these conditions was completely feasible (and even fun), and I'll do a post on how to enjoy winter bike commuting later this fall!

*** Also for the record, my wife and I still bike year-round, including for grocery shopping and dropping our Kindergartener off at school – thanks to the magic of a bike trailers. Do a search on your local Craigslist and change your biking life.Photo by epSos.de

Mr. Money Mustache is a family man living in the United States who retired from work, relatively wealthy, at about age 30. After several years of retirement, he noticed that his still-working peers were envious of his lifestyle. They were making more money than he ever had, yet they were somehow still broke. So he decided to educate the world on how it is done.